1. The Politics of Normalcy
US Policy:

2. A Republican Era Begins
Harding’s Fiscal Policy
Harding was committed to the free enterprise system
Characterized by private ownership of property, including land & resources
Relies on competition for profits & the forces of supply & demand to determine what goods & services should be produced & at what price

3. A Republican Era Begins
The Postwar Recession Ends
Harding worked with Congress to cut taxes and control spending
Repealed taxes meant to fund WWI
Reduced spending by $1 billion
Used the surplus to pay down the national debt
Harding’s policies brought renewed prosperity to the US
Prices plunged, allowing people to afford more
Unemployment dropped from 12% (1920) to 2% (1923)

4. A Republican Era Begins
The Teapot Dome Scandal
Harding’s cabinet, the “Ohio Gang,” brought scandal to the White House
Harding gave Albert Fall control over national oil reserves
Fall leased those reserves to 2 companies that had paid him $360,000 in bribes
Fall resigned when the scandal went public
Harding stood by Fall until own death in 1923

5. A Republican Era Begins
Coolidge Promotes Business
As president, Coolidge worked to cut taxes & control spending
Pushed for reductions in corporate, income, & inheritance taxes
Cut the White House budget
Under Coolidge, the nation continued to prosper

6. A Republican Era Begins
Hoover Promises to End Poverty
Like Harding & Coolidge, Hoover believed in promoting business
Wanted industry leaders to work to together to improve economic efficiency
Hoped that as businesses flourished, poverty would disappear

7. The Republican Boom Years
The US Economy Booms
Under the economic policies of Republican presidents, the postwar recession faded away
Productivity increased dramatically
Unemployment dropped
Wages rose to double what they had been before the war

8. The Republican Boom Years
The Age of Mass Production
The automobile industry led this new age of productivity
By 1929, at least half of all American families owned a car
Made possible by Henry Ford’s moving assembly line which allowed him to increase wages & cut prices

9. The Republican Boom Years
New Industries Arise
The growth of the automobile industry fueled new industries as well
The steel, rubber, & oil industries expanded
Highway construction boomed
Restaurants & hotels sprang up along roads
Service industries, such as gas stations & repair shops, were created

10. The Republican Boom Years
Businesses Get Bigger
During the 1920s, businesses grew due to a wave of consolidation
Harding, Coolidge, & Hoover ignored anti-trust laws
Allowed businesses to merge
Led to the rise of the Big 3 automakers in the US
Created chain stores in the grocery industry, etc.

11. The Republican Boom Years
Stock Investment Grows
During the 1920s, stock ownership spread to the middle class
The Dow Jones Industrial Average doubled between May 1928 & September 1929